Does a Competitive Long-Run Equilibrium Require Cost-Minimization

question 78

Multiple Choice

Does a competitive long-run equilibrium require cost-minimization?

• A) Yes, if firms fail to be as efficient as their competitors, they are driven out of the market.
• B) No, in the long run, firms make zero profits.
• C) Yes, if they didn't, even less efficient firms would enter the industry.
• D) No, because competition ensures their survival.

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Definitions:

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on what the seller believes each customer will pay.

Oligopolistic Pricing

A pricing strategy adopted by companies in an oligopoly, where a few firms dominate the market and prices are often influenced by the actions of competitors.

Monopolistic Pricing

This refers to the practice by a monopolist to set prices higher than in competitive markets because they control a large portion of the market for a particular good or service.

Horizontal Demand

A market demand situation where a small change in price leads to a large change in quantity demanded, often indicative of a highly competitive market.